CA Trust. 3 Beneficiaries boys; Equal Distribution; retired; 60 Y.O.; A,B,C). B is executor; B is Successor trustee. Life Ins/ annuity accounts outside trust disbursed. Remaining Trust admin Property= Antique cars 1,2,3; Cars appraised, Cars= x;1.2x;3 x. EE Bonds= 12 x . bank account 3.6x. No Debts. Home in trust; Value 36x. Home Appraised/registered appraiser. All Agree; A & C agree B buys home; B will buyout A and C; B says before I go and sell my home, to buyout 2/3 of appraised value from A and C; what instrument or whose services do I use to insure that all parties are protected ? I could die. Options? Promissary note; escrow. Are there tax implications ?
My first point of advice is that you should seek local counsel who has experience in estates and trusts. A Probate Code Section 16502 Notice and Consent should allow a distribution in accord with the beneficiaries' wishes if all beneficiaries consent. Probate Code 16501(d) lists certain actions for which the notice may not be used.
As to tax effects, I assume that the assets at issue have a stepped up basis. Your counsel will need to look at this. Experienced trusts and estates counsel will be able to assist you on a number of your issues.
This is a general answer only and you should seek the advice of counsel to address facts specific to your circumstances.
Estate Planning Attorney
You need to consult with a probate and trust attorney who can advise you of the property tax implications of what you are attempting to do. If B purchases the home from A&C with his own funds then the two-thirds of the property will be reasssed for property tax purposes. The parent- child exclusion does not apply to transfers between siblings. There are ways to accomplish this in the trust as long as the trust doesn't require pro rata distributions. Usually a trust allows non-pro rata distributions (that's good), but I have seen trusts that require pro rata distributions. The Trustee (as trustee) will need to borrow money against the residence equal to the two thirds buy-out price (it can be difficult to find a lender willing to do this) and then the cash borrowed will be distributed to A&C and B will take the property subject to the liability. This is a very simplified explanation of what needs to be done. I strongly urge you to consult with an attorney before you take actions that will have adverse property tax consequences. This is NOT something to do on your own.
DISCLAIMER: THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE. IT IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. THIS RESPONSE DOES NOT CREATE AN ATTORNEY-CLIENT RELATIONSHIP BETWEEN US. YOU SHOULD CONSULT WITH A QUALIFIED ATTORNEY FOR SPECIFIC LEGAL ADVICE ABOUT YOUR PARTICULAR SITUATION.
MY colleagues have provided sound advice. This is a matter that requires in depth analysis and consideration by your own estate attorney to be sure that your are well informed.
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